Issue No. 789

Emirates' Heavy Metal Muddle

Pushing Back: Inside This Issue

American, Southwest, and Alaska showed again that conditions in the U.S. weren’t as bad in Q3 as they were in Q2. But that’s not to say they still weren’t bad. In fact, they were awful, far from anything resembling a true recovery. There’s light ahead, however, even amid worsening infection rates, as traveler fears dissipate, testing trials begin, cost cuts are enacted, route networks are updated, and vaccine development progresses.

Southwest’s efforts to make a bad situation better involve unfortunate demands on workers, an unusual number of new destinations, a push for corporate traffic that might lead to codeshare partnerships, and possibly even its first-ever Airbus orders. Boeing might yet satisfy its smaller jet needs with MAX 7s. If not, the alternative is A220s.

In Mexico, recovery efforts are aided by massive capacity reductions. Aeromexico, as it removes planes, still has the weight of absent corporate and intercontinental traffic on its fortunes. Volaris and VivaAerobus on the other hand, are better positioned to benefit from the capacity rightsizing, as well as an active family visit/migrant worker market, Interjet’s disintegration, and Mexico’s lack of any restrictions on air travel.

Australia, with heavy restrictions even among states internally, hasn’t seen much of a domestic travel recovery yet. But with restrictions easing and the virus under control, Qantas expects robust demand before long. Even internationally, the skies are brightening as New Zealand tourists arrive, and as travel bubbles with various Asian countries appear possible.  

Near-impossible, unfortunately, is the situation at Hong Kong’s Cathay Pacific. It doesn’t have a domestic market to tap. Its traffic is more or less just as depressed now as it was early on in the crisis. The only option: Drastic restructuring, involving job cuts and the slaying of its Dragonair unit.


“If there is one thing we have learned and are committed to as a leadership team, it is that low-cost discipline is simply a requirement of this industry if you want to be able to survive in the downturn and thrive in the ups.”  

Alaska Airlines CFO Shane Tackette


July-September 2020 (3 Months)

  • American: -$2.4b/-$2.8b*; -107%
  • Southwest: -$1.2b; -88%
  • Alaska: -$431m/-$399m*; -75%
  • Aeromexico: -$131m; -77%
  • Volaris: -$99m/-$107m*; -47%
  • VivaAerobus: -$33m; -41%

*Net result in USD/*Net result excluding special items/ Operating margin

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